Affordable Care Act (ACA):
On June 28, 2012 the Supreme Court declared the individual mandate to be
permissible exercise of Congress’s taxing powers under the Constitution.
The mandate was not a penalty, but a tax and was allowed under Congress’s
power to tax under Article 1 of the Constitution.
The Court held that the Medicaid portion of the Health Reform, which requires states to accept an enormous expansion in the number of people they cover under the program or face a cut of all Medicaid funds, was unconstitutional as enacted, but found that the expansion could go forward without the threat of the loss of all Medicaid funds.
So what does this mean to the small employer? Well for starters here in the state of Illinois, Governor Pat Quinn just signed into effect that Illinois will have a State Exchange. This would mean by October 1st of 2013 individuals and small groups would need to be signing up for the exchanges for the implementation date of January 1, 2014.
The problem is that the infrastructure is not even close to being in place and I certainly would not want to be one of the first ones to jump into the exchange!
Small employers should look very closely at all the implications to having the exchange in place. Work closely with your CPA there are more tax laws and filings that will need to be done – Even Now – here in 2012 – make sure your accountant keeps you aware of what needs to be reported. For instance in 2012 you will now need to report and do the following:
- Prepare for mandatory Form W-2 reporting for health coverage,
- Distribute the Summary of Benefits and Coverage to enrollees for renewals, and
- Distribute Medical Loss Ratio Rebates to participants, if applicable.
The small employer (defined as fewer than 50 employees unless the State of Illinois raises it to 100 employees) will need to stay on top of the many additional regulations to ensure they are in compliance.
Government run health care – as implicated in it’s name – means more paperwork and more reporting and more penalties for noncompliance. Watch for information and make sure to obtain it from credible sources.